What factors prevent affordable car insurance rates?

Many things prevent affordable car insurance rates, including (1) bad credit, (2) poor driving history, or (3) living in a dangerous neighborhood.

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Zaneta Wood, Ed.S. has over 15 years of experience in research and technical writing bringing a keen understanding of data analysis and information synthesis to reach a wide variety of audiences. She studied adult education and instructional technology at Appalachian State University as well as technical and professional communication at East Carolina University. Zaneta has prepared technical p...

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Joel Ohman is the CEO of a private equity backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He has an MBA from the University of South Florida. Jo...

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Reviewed by Joel Ohman
Founder & CFP®

UPDATED: Jun 18, 2020

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Here's what you need to know...

  • Several reasons could prevent drivers from finding affordable car insurance policies
  • Factors such as a low credit score or bad driving record can increase insurance rates
  • Personal factors such as gender and age can also cause a driver to have high premiums

Some applicants for car insurance have difficulties finding car insurance companies that will offer them reasonable car insurance quotes.

There may be several reasons for this, but car insurance companies have a few very common reasons that cause them to be unable to offer a car insurance policy at an affordable price for some people.

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Low Credit Scores

When people have low credit scores, they are generally seen as irresponsible human beings. Statistically, they are also the cause of more accidents than those who have high credit scores.

A credit score shows whether or not people repay the credit that has been extended to them. Low scores show that they are not doing so and make car insurance companies think the applicant will not pay their insurance premiums.

A low credit score will cause drivers to be categorized as high-risk.

High-risk drivers are most likely to cause an accident where the injured or those with property damages will file claims for the bodily injury liability and property damage liability coverage.

When a client is someone who causes accidents and people to file claims, the car insurance company will be required to pay a lot of money for the bills of those who have experienced loss.

To mitigate the risk they are taking on with people who are likely to cause accidents, car insurance representatives charge higher rates. However, you can find car insurance with no credit check.

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Car Insurance Rates for Teens

Young males, especially those under the age of 20, are notorious for being the most daring drivers.

Those who take many risks on the roads are those who cause the most accidents, and car insurance companies are well aware that a males age 16 to 19 is in this demographic.

Because the young, male demographic has such a high propensity to cost car insurance companies more money than others, insurance companies will charge high premiums.

Have a Driving Record with Too Many Points

Too many points on a driving record is a sign of bad decision-making.

The following reasons can add points driving record:

  • Being arrested for driving under the influence
  • Obtaining tickets for speeding and reckless driving
  • Receiving tickets for breaking the rules of the road

If the violations occur within a short period of time, such as within one year, car insurance representatives know to proceed with caution with these particular applicants.

People with too many points on their driving records are some of the highest risks that a car insurance company can insure.

The risk is so high that an accident is going to occur that these people must agree to pay higher premiums to lower the risk the car insurance company is taking by offering them a car insurance policy.

Car Insurance for Sports Cars

Sports cars are prominent vehicles that are known to be involved in car accidents that have serious bodily injuries.

Sports cars are made to travel fast, and when drivers crash, they may cause significant damage to the other vehicles.

If the sports car driver has optional coverage that will repair the sports car, the bills come will be higher than most because sports cars are more expensive to repair than other vehicles.

If the car needs to be replaced, this can be extremely costly, too.

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Car Insurance for Seniors

Those who are over age 70 are entering a demographic that is believed to be the cause of many accidents.

When a person over the age of 70 is in need of a new car insurance policy, car insurance companies tend to charge higher rates.

Even though some people are in a higher risk category, there are still car insurance companies that will offer them a break on their car insurance rates.

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  1. https://www.consumer.ftc.gov/articles/0152-credit-scores
  2. https://www.statefarm.com/insurance/auto/resources/high-risk-auto-insurance
  3. https://www.investopedia.com/terms/i/insurance_claim.asp
  4. https://www.ehow.com/facts_6175321_car-insurance-higher-boys_.html
  5. https://traffic.findlaw.com/traffic-tickets/the-traffic-ticket-points-system.html
  6. https://www.usacoverage.com/auto-insurance/how-much-does-a-sports-car-increase-your-insurance.html

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